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Debt Counseling Assistance :: Ameridebt Inc
Ameridebt Inc:
The End of Ameridebt National Inc.
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Ameridebt Inc. was one of the country's largest debt counseling and debt consolidation firms, and also a company that was plagued by federal investigations, lawsuits and red flags by numerous industry insiders.
For a breakdown of some of the company's worst moments, keep reading.
Hidden Fees
Ameridebt Inc was charged by the Federal Trade Commission (FTC) with charging consumers over $170 million in hidden fees and charges that were never disclosed. Those amounts were either hidden as a first monthly dept payment or added on to debt payments each month.
Ameridebt marketed itself as a nonprofit, debt management and credit counseling company – meaning they weren't going to charge consumers a fee.
Funneling Profits
Instead of operating as a true nonprofit, Ameridebt was taking those hidden fees and actually funneling them to for-profit entities they were affiliated with. These included DebtWorks and Andris Pukke, a private individual.
Stealing Contributions
Ameridebt was also charged with tricking consumers into making voluntary “contributions” to their debt loads when they enrolled in the program. However, instead of diverting that money to their creditors, Ameridebt would keep the contributions and eventually funnel them to their for-profit affiliates.
No Education
Ameridebt also promised to teach individual consumers how to better manage their finances and avoid any future debt. Instead, the company simply collected a monthly debt payment and had no ongoing debt or financial management counseling for virtually any of their clients and consumers.
Collecting Commissions
Ameridebt was also accused of collecting backdoor or undeclared commissions on consolidation loans. By encouraging their consumers to take out debt consolidation loans, they then collected fees and commissions that went undeclared.
The End Result
Ameridebt Inc was ordered by the FTC to shut down and cease all operations. The company went into bankruptcy and was ordered to never represent itself as a nonprofit, cease all credit counseling services and liquidate completely. The FTC collected a portion of the $170 million judgment from the bankruptcy proceeds.
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